(Foss Vs. Harbottle Case) In the case of Foss Vs. Harbottle, it was held by the court that on the petition of a shareholder, the court cannot interfere in the internal management of the company until
As long as the management or the board of directors of the company is working within the limits of the provisions and rules of the councilor memorandum and the councilor memorandum. In this situation the minority members are bound to accept the decisions taken by the majority members. The court does not intervene by treating it only as a kind of internal difference. As per the facts of the case, two members of a company filed suit against the directors alleging that the company has suffered due to their fraudulent acts. He requested the court to order the said directors to compensate the company, meanwhile, by passing a resolution by the majority members of the company, it was decided that no action should be taken against the directors. The court in its judgment said that the loss has not only occurred to the plaintiffs but to the entire company. Thus the suit should be presented to the company and not to the minority shareholders. The Court observed that the acts done by the directors are such which can be confirmed by a majority.